Apollo's flagship fund took redemption requests worth 14.7% of assets last quarter, still above its 5% cap and mostly resubmissions from investors already partway out. Ares, HPS and the broader non-traded BDC market show the same pattern: less pressure, no new subscriptions disclosed. The desk expects every flagship private credit fund to keep exceeding its 5% cap through year-end, with no manager lifting it before mid-2027.
The retail funds that popularized private credit are reporting calmer redemption numbers, and markets have read that as the turmoil ending. Up close, the same investors are resubmitting the same withdrawal requests quarter after quarter as caps pay them down bit by bit, which shrinks the queue with no new money involved. Apollo's flagship fund took requests worth 14.7% of assets last quarter, down from 16.8%. Ares saw 13.1%, down from 14.4%. Both numbers sit well above the 5% quarterly cap both funds have enforced since at least the second quarter, which is the detail that changes what a falling request rate actually means.
The cap determines how the queue clears. An investor who asks to withdraw the full value of a stake and receives only a slice of it back, typically a third to a half under these caps, is still holding the rest and can resubmit the same request next quarter. Reuters reported that most of Apollo's requests this quarter were resubmissions from investors already partway out the door. The pool of people still waiting to leave shrinks a little each quarter simply because some of them eventually get enough of their money back to stop asking. A lower percentage can reflect a shrinking queue even if no new investors want in.
The pattern holds across the industry. HPS, the manager BlackRock bought last year, saw requests fall to 11.5% from 13.3%. Blackstone's $43 billion flagship fund held steady near 10%, still gated. Non-traded business development companies as a group took in $9.6 billion of redemption requests this quarter, equal to 10.1% of assets, down from 11.2% the prior quarter, according to Robert A. Stanger data. Funds met on average less than half of what investors asked to withdraw. Morgan Stanley's North Haven fund prorated its tender at 43.8%, meaning fewer than half of the dollars requested actually left.
What none of these funds disclose is the other side of the ledger: gross new subscriptions and gross new redemption requests, as opposed to net changes in an existing queue. Those figures would show whether investors are returning. The managers do not provide them. A queue can shrink every quarter for years on resubmissions alone, with the redemption rate declining the entire time, while the fund never attracts a genuinely new dollar. The Financial Times reported managers describing muted demand for new investment alongside the lower withdrawal figures, which is the plainer statement of the same fact.
The surge that created this queue started roughly a year ago, when falling-rate expectations made floating-rate private credit look less attractive against other fixed income, and sudden corporate bankruptcies, including First Brands and Tricolor, raised doubts about underwriting standards across the asset class. By the second quarter of this year, Apollo, Ares, Blackstone and HPS had all capped redemptions at 5% of assets, the standard quarterly limit for these vehicles. Private credit has underperformed the broader debt market this year, according to PitchBook, which is the return backdrop against which investors have been trying to leave.
The Federal Reserve's rate increase this month adds another pressure on the industry. Private credit funds hold mostly floating-rate loans, so a higher policy rate lifts the income the funds collect. It also raises the interest bill for the mid-market, sponsor-backed companies that borrowed from these funds in the first place, tightening interest coverage at exactly the businesses whose debt underpins fund valuations. The same rate move that helps the lender's income statement stresses the borrower's ability to pay.
Barclays credit analyst Peter Troisi says it is too early to call a bottom on redemptions; a more convincing signal would be a faster decline in requests than the industry is now showing. Institutional allocators have kept committing capital through this period, and fund performance has improved from its worst point. Those are the best signs that the strain may be easing. Troisi still sees redemptions declining. Fewer requests, however, do not mean more money is coming in.
That distinction matters because retail wealth was the engine that turned private credit into a growth story for its largest managers over the past several years. Individual investors accessing the asset class through BDCs and interval funds are what let Apollo, Ares, Blue Owl and Blackstone raise money at a pace institutional-only vehicles never could, and it is the channel now stuck in redemption queues. Management fees at the flagship funds are not growing, and the Financial Times reported that performance fees are being missed this year across the group. The fee growth built into how public markets value Apollo, Ares, Blue Owl and BlackRock's asset-management arm depended on this channel expanding. It is instead working through a backlog.
Sponsor-backed, mid-market borrowers who took on floating-rate private credit when it was the cheapest, most available source of financing now face lenders with less capital to deploy and a higher cost of the debt already on their books. A fund managing a redemption queue writes less new credit and prices it harder, which slows the flow of financing to exactly the companies that came to depend on it during the asset class's growth years.
The desk expects requests at each flagship fund, Apollo, Ares, Blackstone and HPS, to remain above the 5% quarterly cap when fourth-quarter figures are announced in December and January. It also expects none of the major managers to lift that cap before the middle of 2027. This call would change if a manager disclosed gross new subscription volume alongside redemption figures. None has done so yet, including in Ares' own update this quarter. The fourth-quarter numbers will show whether that disclosure is still missing.